Why Debt-to-Income Ratios Are Worse Than They Appear

by Lance Roberts
Real Investment Advice

I recently published an article discussing why “recessions” are a good thing by reverting debt buildups excesses during expansions. The argument against debt reversions is always the same in that “debt-to-income” ratios low. To wit:

“One reason (of many) we don’t need a debt reversion is that household debt service costs (interest etc.) as a % of household incomes are currently at a 40 year low.” – S. Porter

If you look at a chart, it certainly would seem that would be the case.

[…] But, like most data from the Federal Reserve, you have to dig behind the numbers to reveal the real story.

So let’s do that, shall we?

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